Hedge funds have amassed their most negative positioning on the Canadian dollar in nearly two years as renewed US tariff threats add to pressure on the loonie, according to a report by Bloomberg citing the latest data from the Commodity Futures Trading Commission (CFTC).

The CFTC's figures show that lkeveraged money managers held a net 99,823 futures contracts betting on a weaker Canadian dollar in the week ending July 21, marking the largest bearish position recorded since August 2024.

The shift comes as the loonie heads for its weakest weekly performance in five weeks. The currency has fallen around 0.5% against the US dollar this week as trade tensions between Canada and the US have intensified.

The latest pressure followed a pledge from the Trump administration to impose an additional 50% tariff on certain Canadian goods. Washington cited what it described as unfair treatment of US alcohol, automotive and dairy products.

For macro hedge funds, the loonie has become an increasingly challenging trade as tariff uncertainty combines with weakness in the Canadian economy and a relatively unfavourable interest-rate differential compared with the US.

The Canadian dollar has underperformed many of its major peers this year, with investors also weighing the prospect that persistent trade friction could further weaken economic activity and limit the currency's appeal.

The latest CFTC positioning data highlights how quickly hedge funds have turned more defensive on the currency, with speculative bets against the loonie now at their most bearish level since 2024.

The build-up of short exposure comes as markets continue to assess whether the latest tariff threats will translate into a prolonged deterioration in US-Canada trade relations, potentially leaving the Canadian dollar vulnerable to further losses.